2013 (8) TMI 270 - HC - Central Excise

Exemption of not printing MRP as per provisions of Rule 26 of LMPC Rules - Petitioner no.1 is a partnership firm engaged in manufacturing of Branded Chewing Tobacco . The petitioner no.2 is the partner of petitioner no.1 firm - Exemption given under Rule 26 of the LMPC Rules (earlier Rule 34 of SWMPC Rules) to the manufacturers for sale of goods in net weight of less than ten grams or 10 milliliter are exempted from declaring maximum retail price Held that - The provisions of Rule required it to print the weight of finished goods on each packing of such goods to be sold or atleast print that the goods content are less than 10 grams in the packets to be sold. In the absence of mentioning the weight of goods contained in every packet, it could not be known at any time that the contents of goods in a particular packet are more or less than exemption limit Show cause notice has not been given with any bias as the petitioner failed to cooperate in the enquiry and that the investigation/ enquiry is still pending. The petitioner also did not give details for giving effective reply of the facts, which the petitioner treats as jurisdictional facts and on which the exemption is claimed - Writ petition in the absence of the petitioner s cooperation in leading evidence on which he was claiming exemption, is not maintainable. Limitation Held that - Party have willingly, suppressed all the facts and mis-interpreted the provisions of exemption in their favour, to pay less duty on the clearance of their products - Party have willfully suppressed the material facts of non-mentioning the weight on every packet which they were required to print as per the provisions of S.W.M.P.C. Rules/L.M.P.C. Rules, in case they want to seek exemption from printing M.R.P. and accordingly they have paid less amount of duty hence the provisions of Section 11A, as amended, for extended period, are clearly invokable in this case and accordingly the provisions of Section 11AC are also invokable Decided against the Assessee.

Issues Involved:
1. Maintainability of writ petition against demand-cum-show cause notice.
2. Jurisdictional error and factual errors in the show cause notice.
3. Compliance with Rule 26 of the LMPC Rules.
4. Petitioner's cooperation in the enquiry process.
5. Prima facie satisfaction of the Adjudicating Authority regarding suppression of facts.

Detailed Analysis:

1. Maintainability of Writ Petition Against Demand-Cum-Show Cause Notice:
The petitioner challenged the maintainability of the writ petition against the demand-cum-show cause notice issued by the Commissioner of Customs, Central Excise, and Service Tax, Kanpur. The court noted that ordinarily, writ petitions are not maintainable against such notices as the petitioner has sufficient opportunities to establish non-liability for excise duty and penalties during the adjudication process. The petitioner failed to cooperate with the Adjudicating Officer, thus weakening the argument for maintaining the writ petition.

2. Jurisdictional Error and Factual Errors in the Show Cause Notice:
The petitioner argued that the show cause notice contained gross factual errors and jurisdictional errors. They claimed an exemption from declaring the Maximum Retail Price (MRP) under Rule 26 of the LMPC Rules, as they sold branded tobacco in quantities less than 10 grams. The petitioner relied on precedents such as Jayanti Food Processing (P) Ltd. v. Commissioner of C. Ex., Rajasthan, and other Supreme Court judgments to support their claim. However, the court found no premeditated bias or prejudicial findings in the notice that would justify the writ petition at this stage.

3. Compliance with Rule 26 of the LMPC Rules:
The petitioner contended that they were entitled to an exemption under Rule 26 of the LMPC Rules, which exempts goods sold in quantities less than 10 grams from declaring the MRP. The Adjudicating Authority, however, observed that the petitioner did not provide evidence showing the weight of individual packets and failed to print the weight on the packets, which is a mandatory requirement for claiming the exemption. The authority detailed the petitioner's failure to comply with these provisions, leading to the conclusion that the goods should be assessed under Section 4A of the Central Excise Act, which involves MRP-based assessment.

4. Petitioner's Cooperation in the Enquiry Process:
The court noted that the petitioner was given multiple opportunities to appear, provide replies, and lead evidence in support of their contentions but failed to do so. The petitioner cited reasons such as ill health and lower backache for non-attendance, but these were deemed insufficient. The Adjudicating Authority emphasized that the petitioner did not attend hearings or provide necessary documents, which hindered the enquiry process.

5. Prima Facie Satisfaction of the Adjudicating Authority Regarding Suppression of Facts:
The Adjudicating Authority's demand-cum-show cause notice outlined that the petitioner did not follow the mandatory provisions for claiming exemptions and failed to mention the weight of goods on the packets. The authority stated that the petitioner's actions suggested an intention to evade duty and suppress material facts, invoking provisions of Section 11A and Section 11AC for extended period and penalty, respectively. The court found no bias in the notice and emphasized that the petitioner should have cooperated in the enquiry to establish their claims.

Conclusion:
The court dismissed the writ petition as premature, stating that the petitioner failed to cooperate in the enquiry and did not provide evidence to support their exemption claims. The petitioner was advised to present evidence in accordance with the law during the adjudication process to establish the facts on which the exemption was claimed. The court upheld the Adjudicating Authority's observations and found no grounds for maintaining the writ petition at this stage.

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